Human Relations Commission order stands; jurisdiction affirmed
Harrisburg – The Pennsylvania Supreme Court has denied review of a $700,000 predatory lending order against Girard Finance Company of Bala Cynwyd, Montgomery County. The Pennsylvania Human Relations Commission found the company and its owner Thomas Richter targeted minorities for unfair business loans.
The court’s May 15 decision ends appeals of the PHRC’s October 24, 2011 order. The commission ordered Richter and Girard Finance to cease discriminatory lending practices and pay a total of $668,951 to seven borrowers for damages plus humiliation and suffering.
The company and Richter were each ordered to pay $10,000 in civil penalties to the commonwealth.
Richter and Girard appealed to Commonwealth Court, which issued a July 2012 opinion affirming both the commission order and its jurisdiction over lending for commercial real estate.
“Lenders who prey on minority-owned small businesses in this way need to know it isn’t just unfair, it is illegal,” Executive Director JoAnn Edwards said. “Loan terms and conditions must be based on financial qualifications, not race.”
Girard Finance loans, which targeted primarily black neighborhoods in Philadelphia, included interest rates as high as 35 percent, and high fees and penalties without justification. Girard also frequently “flipped” loans, or reset mortgage rates without benefitting the borrower.
The company neglected to run credit checks or review lenders’ financial histories to assess their ability to repay loans. These and other practices alleged in the original complaint met legal tests for predatory lending.
“The record is replete with evidence that Girard Finance and Richter preyed on minorities to make a profit,” the Commonwealth Court opinion stated. “…the testimony of Richter’s own witnesses, and claimants’ testimony show Girard Finance and Richter made a living buying and selling the same bars over and over in the minority community.”
The Pa. Human Relations Act prohibits discrimination in lending for commercial property. The Commonwealth Court’s opinion upheld the commission’s jurisdiction.
The Supreme Court’s denial of the appeal is final.
Find out more about predatory lending and other forms of discrimination on our website, www.phrc.state.pa.us.